Building Competitive SMEs through Social Media Capability and Digital Competencies

Abstract

Competencies and Innovation Capability serving as mediating variables among MSMEs in Sumbawa District. The study applies the Resource-Based View (RBV) as the theoretical foundation and employs a quantitative explanatory approach using Partial Least Squares Structural Equation Modeling (SEM-PLS). The researcher collected data through questionnaires distributed to MSME actors who actively use social media in their business activities. The findings indicate that Social Media Capability has a positive and significant effect on MSME Performance and Digital Competencies. Furthermore, Digital Competencies positively and significantly affect MSME Performance and successfully mediate the relationship between Social Media Capability and MSME Performance. These findings demonstrate that effective social media use can strengthen digital competencies, thereby improving business performance. However, the results reveal that Social Media Capability does not significantly affect Innovation Capability, and Innovation Capability also does not significantly influence MSME Performance. In addition, Innovation Capability fails to mediate the relationship between Social Media Capability and MSME Performance. The study concludes that digital competencies represent a key factor in improving MSME performance in the digital business era, while innovation capability among MSMEs in Sumbawa District remains relatively underdeveloped.